Links 9/10/14

I want to thank readers for their extensive, thoughtful, and heartfelt comments on our Finance and Social Justice post yesterday. I know that it is discouraging to see so much misconduct and corruption and see so few obvious avenues for stopping it. But the rentiers and their allies and the cowed to corrupt regulators have far more freedom of operation if the public remains passive out of ignorance. The perpetrators and their enablers don’t like transparency, and like criticism even less. So circulating information about chicanery and letting politicians and influencers (like the editors of local newspapers and producers at local newsstations, both of which have clout with Congresscritters) does shift the debate. Again, from a 2010 post I have often quoted from Richard Kline about political change:

The nut of the matter is this: you lose, you lose, you lose, you lose, they give up. As someone who has protested, and studied the process, it’s plain that one spends most of one’s time begin defeated. That’s painful, humiliating, and intimidating. One can’t expect typically, as in a battle, to get a clean shot at a clear win. What you do with protest is just what Hari discusses, you change the context, and that change moves the goalposts on your opponent, grounds out the current in their machine. The nonviolent resistance in Hungary in the 1860s (yes, that’s in the 19th century) is an excellent example. Communist rule in Russia and its dependencies didn’t fail because protestors ‘won’ but because most simply withdrew their cooperation to the point it suffocated.

In other words, we are engaged in is a process that is incremental and thus progress is hard to see, much the less measure. And the parties that the citizenry is up against will endeavor to make any concessions look like things they already intended to do.

There are different ways of coping with these daunting requirements: that of a need for sustained effort with low likelihood of much in the way of tangible success. I’ve adopted a Stoic attitude, that this is a duty, and one needs to find a sense of reward in the process rather than in the outcomes (and the rewards include forming a community of the like-minded). I’d be curious to learn what other strategies readers have.

Most British wildlife now living in abandoned DVD libraries Daily Mash

Map: How the Ebola Outbreak Spread through Africa PBS

Surgery Often Doesn’t Work on Worn Out Knees Patient Safety. Another pet health issue!

Apple looks to swipe the payments market Financial Times

Fossil Fuels Stir Debate at Endowments Wall Street Journal

Forget Tesla. If you really want to reduce vehicle emissions, it’s unglamorous buses, not flashy sedans, that need to go electric Slate

China faces Japan-style debt woes Financial Times

Facing Reality in the Eurozone Project Syndicate (David L)


Scottish split would hit UK growth, warns top investment group Telegraph

Carney warns Scotland over pound BBC

Braveheart: Aspiration or reality? Alex Salmond claims Scotland could join the EU in 18 months Open Europe

Scots Independence Genie Fires Separatist Dreams of EU Statehood Bloomberg

Putin’s Secret Friends in Paris XXCommittee (Max P)

UK Wants U.S. Supreme Court To Limit BP Liability For Deepwater Horizon OilPrice

Why does Italy not grow? Bruegel

Argentina right to seek global debt restructuring: Stiglitz Reuters

Restructuring Debt Restructuring Project Syndicate (David L)

US bombing defended Phnom Penh Post (Lambert). One Nobel Peace Prize winner dissing another.

Big Brother is Watching You Watch

Discussing Online ‘Right to Be Forgotten,’ Google Takes European Privacy Tour to Spain New York Times

Firsthand account of NSA sabotage of Internet security standards BoingBoing

Obama prepared to act against militants in Syria Washington Post

Fear the Fed: Stocks Slammed by Strong Dollar, Rising Rates Barron’s

What Is the Ex-Im Bank Hiding? Huffington Post

Call for curbs on police military gear Guardian

Detroit Clears Crucial Hurdle on Bankruptcy New York Times

2014 New York primary election: Andrew Cuomo, running mate prevail in New York Politico. Holy fucking a, Teachout got 35% after Cuomo suppressed endorsements??? As one of my DC colleagues wrote yesterday:

Andrew Cuomo, who represents a dangerous and authoritarian strand of billionaire fueled politics, is the incumbent. He faces Zephyr Teachout, a person I’ve known for more than ten years. She’s part of a new generation of post-financial crisis Democrats. She’s running on a strong public financing and antitrust campaign, a ban on fracking, renewable energy, and so forth. She’s in the pocket of Big Ethics. Cuomo has spent $15M, she has spent $0M. The shocking thing is that, she’s still in this.

It’s a real campaign, with real issues. Your vote matters. And it will send a shock wave throughout the political establishment, even if Zephyr only gets 30% of the vote. That’s how scared they are.

Read more.

Class Warfare

Will the government stop using the poor as a piggy bank? MSNBC

NYC Building Selling 10 Parking Spots For $1 Million Each Because Obviously Consumerist

Life on $2 a Day Counterpunch

Antidote du jour:


See yesterday’s Links and Antidote du Jour here.

Print Friendly, PDF & Email


  1. Greenguy

    Now that the primary is over, I hope Teachout supporters will turn to Howie Hawkins, the Green Party candidate for governor, who is already at 7% in the polls and climbing. Giving the Green Party a large vote in November will shock the system and thrust the anti-corporate party up the ballot and into the spotlight. Check out!

    1. Lambert Strether

      The Democrats will never listen to the left unless the left causes them to lose elections, and is understood to do so. That’s why the Democrats kick the left; they have no fear of them. The Republicans hate those to their right, but fear them too, which is one of the many reasons The Overton Window keeps being dragged right.

      Susie Madrak has the definitive post on this dynamic.

      1. Oregoncharles

        Good point, but there’s another interpretation:

        The Democrats have been DRIVING the Republicans, and therefore the “window”, to the right. This was the avowed intent of the DLC (Clinton and Gore): move to the right in order to steal the Republicans’ donors. Both parties know they have to maintain some apparent distinction, so that forces the Republicans to move ever further to the Right, till they wind up cornered in crazy country. Good strategy, really, as long as people stick with the 2-Party.
        At this point, there’s a vast gulf on the left, where, according to issue polls, the people are. It’s a wonder of politics that the system hasn’t already broken – though the numbers of people registered with the major parties has been plummeting. At this point, “independents”, including other parties, are over 40%, about the percentage Bill Clinton won the presidency with. When it passes 50% – soon – we won’t HAVE major parties any more. One has to wonder when people will start voting accordingly. But the propaganda is pretty thick, and we all grew up indoctrinated with the “2-party system.” Habit and complacency are very strong.

        1. proximity1

          You guys are caught in a semantic-loop of the DLC’s making –and you demonstrate how effective is that strategic device. LS is right, “the (formal party structure) ‘Democrats’ certainly won’t attend to any genuine Left’s agenda unless they are forced to. When “DLC (Clinton and Gore)” can pass for “the Democrats,” those of us who ha ve a Left-agenda have already lost.

          We can either try to salvage the party name “Democrat” as relevant to the aims and interests of the Left or abandon that as unworthy of our time–in which case an alternative has to be created–which shall inevitably be as vulnerable to corruption and cooptation as was the former Democratic Party.

        1. proximity1

          Banger, “Realpolitk” is the province of the Cheneys, the Kissingers, the Wolfowitzes. It’s for those who have no use for principles. By embracing it as a operating mode, you’re fully embracing an “ends-justify-the-means” approach to affairs of society, politics and economics. This, too, is a masterful way by which the predatory class has defeated and morally disarmed what should otherwise be their distinctive opposition. In realpolitik, there is no room for principles. That’s why the reactionaries are so fond of it. The Left’s genuine adherents cannot afford to embrace that.

  2. Jim Haygood

    Paul Kasriel is bullish on inflation:

    In the four quarters ended Q1:2014, the latest data available, holding gains of U.S. household assets in relation to nominal Gross Domestic Purchases averaged 9.4%. Holding gains of this magnitude are closing in those experienced during the NASDAQ bubble of the late 1990s and the housing bubble of the mid 2000s.

    As of July, the sum of commercial bank credit and Fed credit had increased 9.7 percent year-over-year despite a sharp slowing in Fed credit growth due to the winding down of QEIII. Growth in thin-air credit of this magnitude is high in an historical context. Persistent growth in thin-air credit of this magnitude typically results in rising inflation – asset-price inflation and/or goods/services-price inflation.

    The U.S. already is experiencing asset-price inflation. Given its historically long gestation period, a sharp acceleration in goods/services-price inflation is likely to be evident in 2016.

    1. Ben Johannson

      Kasriel also said: I will not keep you in suspense. I believe that the greater risk for the global economy in general and the U.S. economy in particular is inflation, not deflation. I arrive at this conclusion both on secular and cyclical grounds.

      . . .in 2009. How’d that work out?

  3. Jim Haygood

    Kirchnerismo adds to its economic laurels:

    Argentina was the world’s top meat exporter in the 1930s and No. 3 a decade ago. This year it’s headed for 11th place behind Belarus, according to data compiled by the U.S. Department of Agriculture.

    The portion of the country’s beef sold abroad is down more than two-thirds from 2005, when the government introduced a 15 percent levy on beef exports, and the following year introduced a permit system that lets authorities influence supply.

    The Economy Ministry withheld export permits last month. The controls aim to rein in beef prices, which have soared 66 percent, exceeding the country’s 38 percent inflation rate.


    As any third-grade arithmetic student can work out, when you cut off exports, your foreign exchange reserves … GO DOWN!

    In fact, they’ve been cut in half since early 2011. Expect a policy change as reserves approach their asymptote of zero in 2016.

    Possibly this is all the tragic result of a misunderstood acronym. ZIRP does not mean ‘Zero International Reserves Policy,’ Ms. K.

    p.s. Eat your heart out, Belarus!

  4. Ulysses

    Zephyr and Tim have every right to feel proud of their showing last night:
    Zephyr Teachout declared victory on Tuesday night, shortly after losing her primary challenge to Governor Andrew Cuomo by just over 25 points.

    “So, it does look like I’m not going to be the next governor of this state, but this is still a big moment and I still want to celebrate it,” she said, in a concession speech to about 150 fans and reporters at a Hell’s Kitchen night club.

    Cuomo won 62 percent of the vote on Tuesday, but the focus was squarely on Teachout’s surprising 35 percent, a high-water mark for recent challengers.

    “This campaign demonstrates the rise of a new force in New York politics and in American politics,” she said, to applause. “Democrats don’t need to be scared anymore. … Democrats in New York have to shed their fear and speak up.”

    Now imagine if all the thousands of good people energized by this primary campaign were to be organized into a new Skunkster Party!! We need to challenge not only individual corporatist Democrats like Cuomo, but the whole kayfabe charade that makes up our two-party system– perfectly designed for maintaining corporatist control.

    1. ambrit

      That the two garnered similar percentages of the vote, 35% for Teachout and 40% for Wu seems to be telling us something about the demographics of New York.
      A Skunk Party is a perennial occurrence. What’s needed now is organization. The kind of organization that can put a hundred progressives in a Townhall Meeting or Council Session on short notice. That’s how social activists down the years have done it.

    2. grayslady

      What surprised me about the vote is that usually each party has about 20% that is hard core–extreme left or extreme right. Teachout and Wu were clearly far left. Their numbers–35%-40%–tells me that hard core liberals are on the rise; it’s just happening more quietly than the Democrat party and the propaganda press realize.

      1. Lambert Strether

        I hate to break the news to you, but former members of the Dean Campaign, like Teachout, are not “far left,” and there’s literally no such thing as a “hard core liberal.” What you assuming is that the political spectrum in the United States is not skewed heavily right by world standards; but it is.

        1. Oregoncharles

          Issue polls show the public very progressive – way, way to the left of the Democrats.
          In this case, a lot had to do with Cuomo’s corruption problems and general obnoxiousness.

        2. grayslady

          Yes, Lambert, there are a number of hard core liberals and many of them comment on this website. As for Teachout, based on her interview with Yves, I’d say she’s matriculated way beyond Howard Dean.

          1. Yves Smith Post author

            With all due respect, did you read Lambert’s comment?

            And have you at all looked at polling data?

            Positions that are regularly depicted as left by the corporate-owned media, such as preserving Social Security and Medicare, better wages, protecting the environment, in fact are centrist when you look at what the public actually wants. As Richard Kline wrote in 2010:

            Secondly, let’s dispense with several basic misconceptions regarding why progressives are presently so unsuccessful.

            “Progressive goals are not popular.” Even with the systematically distorted polling data of the present, this is demonstrably untrue. Inexpensive health care, progressive taxation, educational scholarship funding, curtailment of foreign wars, environmental protection among others never fail to command majority support. It is difficult to think of a major progressive policy which commands less than a plurality. This situation is one reason for the lazy reliance upon electioneering by progressives, they know that their issues are popular, in principle at least. Rather childishly, they just want a show of hands then, as if that is what goes on really in elections.


          2. Lambert Strether

            I don’t think there’s any such thing as a “hard core” “liberal’; if we think of politics as a Whitman’s Sampler box, liberals have creamy centers. They are not hard candy.

            “Hard core liberal” is like “vacillating conservative.” No such animal.

        3. ambrit

          Someone yesterday ran Gore Vidal’s famous quote about the single party with two right wings. Otherwise, you’ve got the Trots and the Anarcho-Syndicalists. I must agree with you about not seeing any real Marxists in the Dem fold lately. (The Socialists used to do much better at the State and Local level anyway.)

      1. Carla

        Hear! Hear!

        The way you break the stranglehold of the gigantic Republicrat corporatist party is to vote for the only non-corporatist party: the Greens!

      2. Howard Beale IV

        Remember not too long ago that Yves made a statement that she had secured several internet domains for and hinted at creating a new ‘party’ – The Skunk Party – now the question becomes what is the Skunk’s party’s real purpose-it’s plain to see it’s totally useless for making any change for the 2014 mid-terms, and as far as 2016 goes, a whole lot of time is going to pass between now and then. Teachout/Wu generated a lot of hope-but that can only carry things so far, and in the end as far as the primary goes, they lost.

  5. kapala

    re: Putin’s Secret Friends

    is it me or does there seem to be some bias here in reporting “both sides” of the conflict in Ukraine? Kinda like how the msm just has to give equal airtime to anti-science climate change deniers.
    A quick read of that article sets off so many alarm bells, as with links to other Ukraine stories on that site.
    Now sure you can say that you are simply presenting this article as an example of western propaganda – but you did not say that so one must conclude that this is article should be treated as part of a serious discussion of the conflict in the Ukraine.
    This is not the first time (my first time commenting about it, though). I remember a few weeks back a similarly hack article linked here, and when commenters pushed back on that article, Lambert Strether blows oof their concerns with “you should be smart enough to see through it” – completely missing the point that linking to this article in the same way you link to other serious artciles gives the impression you that this article is equally as serious.
    Propaganda is propaganda, and not calling it out as such is simply enabling the distribution of propaganda.

    1. kapala

      well – so many words about the linking of the article – might as well bloody discuss it then!
      It is an interesting aspect that some (many?) on the european far-right politically support Russia in the current Bear vs. “The West” standoff engineered by washington.
      Seems however with some local knowledge and a bit of thinking that this is very similar to the current political situation in the US where two very different groups – libertarians and anti-war/empire progressives find common ground on an issue central to both – which to me imples they could and should work together.
      Much of the resurgence of the far-right in europe can be directly traced to dissatisfaction with the EU and their slavish allegiance to the US and US style internal and external policy. The obvious and closest counterweight at this time (and for the last decade) is Russia.

    2. grayslady

      This article immediately struck me as just too breathless. “Look at those Russians. They’re making alliances with some very shady characters.” As if the U.S. never makes alliances with shady characters. Yes, a pretty obvious bias, although intended to appear subtle.

        1. hunkerdown

          Nice! we seem to strip out the emoji range of Unicode here. Anyway, those codepoints were:

          U+1F404 COW

          Please use your local Character Map application to view.

      1. Lambert Strether

        This would violate Links’ brilliant minimalism. Anyhow, then we’d get into degrees: WaPo, the full cow; Guardian, half-a-cow, and so forth. Of course, half a cow is better than none. So there’s that.

        Code points impressively geeky, however. Kudos.

    3. Yonatan

      Look at the bio in the ‘About’ section of the blog

      “John R. Schindler is a strategist, author, and commentator … [was] professor of national security affairs at the U.S. Naval War College … nearly a decade with the National Security Agency… worked problems in Eastern Europe and the Middle East … collaborated closely with other government agencies … also served as an officer specializing in cryptology … senior fellow of the International History Institute … chairman of the Partnership for Peace Consortium‘s Combating Terrorism Working Group … lectured on terrorism and security in over twenty countries.”

      In short, a well-placed foot soldier for the US Deep State.

      1. Lambert Strether

        I’ve always wondered if there is a shallow state, and whether there is a deeper state than the Deep State, and if so how Deep State proponents tell the difference. To my mind, the state is the state….

  6. Larry

    I agree completely with your statement that change happens in incremental and nearly unobservable steps. But it will come if the fight is fought. We have to accept that reality and constantly get back up after small defeats.

    I think things have already taken a very positive turn. The fact that it is now common to hear the upper class described as the 1% is something that would have seemed strange to all but a few people prior to the crisis.

    A large cadre of young people are seeing how the system is working for them. With low job prospects and high debt.

    Things will change. But we must work at it everyday, even in small ways. I do believe we’ll get to a better place eventually. The status quo cannot work for much longer.

    1. Gabriel

      Change will come in our financial and/or economic systems – but only if many people see that the current system isn’t working for them. And only if they see a feasible alternative/s.

      1. I’m not sure how many people see the current financial/economic system as broken. Certainly many on this site plainly do. But how about the rest of the voters? A situation isn’t a problem unless enough people see it as a problem and say its a problem to others.

      I don’t think there is now enough and widespread enough dissatisfaction with our system. Many of us still expect the current financial/economic system to yield a bonanza for us manana. Many of us still treasure the American Dream – more, more.

      NakedCap helps point out problems – but it will be slow going. I encourage NakedCap to keep “educating” our voters about the problems with the current system – as it is so doing.

      2. Alternatives to the current financial and economic systems do exist – but few know about them. Such alternatives are scattered among think tanks, books, and web sites. But there is no single collection of alternative approaches in one place so they can be each studied and compared. Gene Sharp’s book is probably an example.

      After the above two points are done, we also need a lot of public discussion about these alternatives. Not much will happen unless there is public discourse about these.

  7. Whine Country

    Yesterday I wrote a little about the accounting aspects of “accounting” control fraud and a few actually read it. Since we’re still drying out from the floods here in Arizona I thought I could expand a little on what I wrote yesterday.

    Remember, as I wrote yesterday, Accounting Control Fraud = Balance Sheet Manipulation in order to overstate income (by inflating assets or deflating liabilities) and minimize capital. Manipulation of the balance sheet is principally achieved by inflating asset values by using unrealistic valuations when marking assets to market. The theory behind mark to market value is that assets should be valued by their “market” value at any given date in order to properly evaluate an entitie’s solvency. Being solvent means that your assets exceed your liabilities and that the owners’ have equity. It is no different than the equity in one’s home for those who own or have owned a home. The market value of the home is X, the mortgage (debt) is Y and the equity is X – Y (equity for banks and other companies is often referred to as Capital). The first absolute principle is that market value must be actually what one could reasonably expect to receive were the asset to be sold immediately. The emphasis is on immediately. If the market value is properly calculated but the asset will take some time to sell, that brings into question if the market value is indeed properly calculated. This is what happened in the sub-prime crises, market values were obviously not calculated correctly and a very large number of homes had no (actually minus) equity. If you just take the very large numbers of homes with negative equity (underwater mortgages) and add them up, you can easily see how the balance sheet numbers of the big banks would also likely be underwater if their assets were properly market to market. As history has shown TPTB obviously could not let that happen.

    Here is how the Fed handles this. To use our homes as an example, let’s say that we mark our home to market at $X. Remember, market value is what we can get for it immediately. We list our home for sale at $X, but as we all know, it will not sell immediately. Assuming we have correctly calculated the market value of our home, the time lag between when we immediately offer it for sale and the actual date will not affect our solvency (we still have our equity) but it causes a liquidity problem. For example we have a large medical bill that must be paid today, we cannot use the equity in our home to do so. Not to worry, we should be able to find someone who will lend us the money against our equity while we wait for the sale to be concluded. So it is with the banks only on a massive scale. But what happens if, for whatever reason we have erred in calculating the market value of our home. We really don’t have a liquidity problem, we have a solvency problem – we have no source other than future earnings with which to pay our bills and those who we owe money to will just have to wait.

    This brings us to the question, why did Lehman Brothers fail and set off the GFC? Their mark to market balance sheet, certified by a prominent public accounting firm, said they had plenty of market value on their balance sheet, well in excess of their liabilities So what gives? If that’s true, Lehman just had had a liquidity problem. All they had to do was go to the financial markets and solve their LIQUIDITY problem. But wait, did Lehman have a LIQUIDITY problem or did they have a SOLVENCY problem? The answer to this is critical. What we do know, is that the other players in the financial sector were convinced that, just as their own balance sheets were pure fiction, Lehman was in fact INSOLVENT! This is an important point, because it was the very leaders of the movement to mark assets to market, the ones who assured us that there is no way that Mark to Market accounting is a problem, who had to deal with that very problem! In other words, they were forced to stop believing their own bullshit, for if they had confidence that there was no balance sheet manipulation going on, why would they not accept that Lehman only had a liquidity problem and would finance their way out of their cash flow problems? No indeed, at that moment, all of the banks and financial players had to confront the truth – that their balance sheets were and are nothing but fiction and, more importantly, this time it matters.

    So, if you think back about the noise (I just can’t bring myself to call it information), that came from the Fed and continues until today, I believe you will recall hearing the SOLVENCY V. LIQUIDITY question discussed many times. And the solution to the problems that our economy faced was met, just as it has always been met, by declaring, whether true or not, that our problems are simply LIQUIDITY problems. Why, because the Fed says so! So, what have the Fed and other central banks been doing to remedy things? In one form or another providing LIQUIDITY in hopes that the true market values of assets will eventually equal the fictional values that have been presented on the banks’ balance sheets. Every single maneuver has had that at its core. And if that cannot be done fast enough, then other policies will be implemented to goose the net earnings of the banks because capital increases as net income increases (That is, if the idiots at the Fed do not allow huge unearned bonuses and dividend payouts). So, the Fed has a very simple and elegant solution: allow fictitious balance sheet numbers to continue, have banks conduct business as usual with the Fed’s helping hand, and eventually, over time, fictitious balance sheet numbers will equal the true market value, and the Fed can take some time off its “emergency” practices. And, all of this is made possible by simply decreeing that we do not have a SOLVENCY problem but instead have a LIQUIDITY problem.

    Yes, our political leaders are on sound theoretical ground when they say (again theoretically) that focusing on the amount of capital or cushion that the banks have will (again theoretically) lessen the chance of insolvency. But when assets are valued at fictional amounts that the banks themselves don’t even believe (except for purposes of calculating their bonuses), where to you even start to make the calculation. Don’t worry, with the Fed’s position, it doesn’t matter. We will just, as they always do, declare any balance sheet problems to be due to LIQUIDITY problems, pretend that the values are correct and then keep in effect policies that we know will ultimately raise the asset values to somewhere close to what they say they are, or we help them make a lot of money, of which some small amount will add to their capital. It just takes time.

    Use your own eyes. Look at everything the Fed and other Central Banks have done. Low interest rates boost the balance sheet because, as we know, debt varies inversely with the interest rate. Low rates = assets at maximum potential value. And low interest rates boosts the stock market. And who makes boat loads of money off a rising stock market? Banks, of course. Juiced earnings equals more capital for the banks. Mortgage and other asset purchases (now being tapered until…don’t hold your breath) takes mispriced assets off the balance sheets of the banks and puts them on the Fed’s balance sheet (no one even looks at the relationship of market values on the Fed’s books and market values in the real world). And, when will this end? Only when, AND IF, the fictional market values are equal to the reasonably calculated true market values, which could literally be never if the economy falters! The only thing that you have to worry about is, how much time will this really require? According to Fed’s future guidelines, we still do not know when, if ever, that will be.

    The fundamental problem is that you cannot just let the banks have business as usual to grow out of the problems that they created, and are actually still in, without destroying the economy for the vast majority of people. This is not a moral statement, it is the reality we face. I think TPTB know that but cannot either admit it or find the nerve to deal with it. Yes, this is like sausage as described by Bismark, if we see how it is made, we will never eat it. On the grand scale of things, the Fed has condoned a system that has forced the balance sheets of the vast majority of us to be marked to the real market while allowing the big players to maintain the absolute fiction that they have been feeding to all of us, while hoping that time will cure all wounds. It is painfully obvious to all of us 99 per centers that, while we would like to believe in the tooth fairy, we had a SOLVENCY problem and not a liquidity problem. It is certainly not true in the case of the elites. Everyone’s assets should have been required to be marked to the true market value and not just some. Consider this mathematical certainty, the true wealth of a nation is the sum total of all of the wealth of its people (including government entities) added together. This is not rocket science. Therefore, if you diminish only a portion of the population’s wealth by a very large number (I’m sure that someone at NC can find that very large number) and allow another group to maintain their claims on wealth at inflated values (and indeed take virtually all future gains for themselves), what has happened? You just took that wealth and gave it to the elites! And to make matters worse, the wealth has been transferred from those who need it the most to those that absolutely don’t need it at all! If this happened by physical force, it would be impossible to even imagine that the government would do nothing. When done with smoke and mirrors, it’s the just the market doing its good works! Remember, wealth is really spending power. If you keep it, you can either spend it at some point or give it to someone who can. For us it is gone.

    Our economists focus on income, production, potential and really have no idea about the balance sheet implications us people have. We in the 99 percent have balance sheets too! And just as in the business world, when our assets go up in value, our income goes up. The Fed could have just as easily let us maintain fictitious balances for our homes on our balance sheets, but they wouldn’t. Our balance sheets have been virtually destroyed and economists write as though a balance sheet is something that they can’t understand. (And that’s because they really can’t so they just assume the problem away!) I just told you all you need to know. In terms of one’s total income, why is a balance sheet critical to companies and meaningless (or just worth a word or so in passing) as far as us humans are concerned? Remember what I said above, wealth is future spending but ours is gone. So when you read about our income POTENTIAL being below trend and that it may never return to that trend, they are conveniently forgetting to say that our spending would have also included the future spending of our wealth, and, in doing so, purposely ignoring a very large elephant in the room. While the Fed cares not a bit about our balance sheets and forces us to look at our wealth in the real world, with real world market values, our economists just assume that it matters not that our wealth (and our future spending of that wealth) has been literally taken away and given to our elites. It had to be done and we just have to get over it. What does it mean to be treated equally under law anymore? (I think that George Orwell’s character, Napoleon the Pig, answered that a long time ago when he said, “On the farm, all animals are treated equally, it’s just that some are treated more equally than others”) The bottom line is that the problem that economists lament related to INCOME growth for the 99 percent, is vastly understated because they don’t know how to incorporate balance sheets into their analysis and just assume it away. And, as far as future wealth accumulation is concerned, such a small portion of our population has so much wealth that we have created a self-fulfilling prophecy. The more concentrated the wealth is, the more the prices are bid up, and at the end of the day, this small percentage of people end up merely selling assets to each other – at a profit, of course. And the banks grow ever richer because they intermediate the transactions. So remember, when economists talk about us getting the shaft on income gains, they conveniently forget to say anything about the spending that we had on our balance sheets that was taken away and given to the elites.

    I have one last question. If I am wrong about this then I would hope that someone will correct me as to exactly where it is I am wrong. If I am not, how could it be possible that after what we have gone through since the GFC, no one has written to tell the truth about what is happening? (My own theory is that the people that know better are too comfortable with their position of being an integral part of the looting that is going on. Why kill the golden goose?) The bottom line is that, if no one has gone to jail, it is fair to assume that a catastrophe befell our nation and it was really no one’s fault. OK, so we all take a hit proportionally and move on. The idea that we could rationalize a policy that steals so much wealth from a large segment of the population who are the least able to afford the loss and transfer that wealth to a group that literally does not need it, and that there was no other alternative, makes me sick. No matter what else you can say about our times, we have certainly lived long enough to see the death of shame.

    If you remember one thing only from what I have written, please let it be that it is absolutely true that the bankers who manipulate the balance sheets, with tacit approval from TPTB, are paid bonuses on that manipulated balance sheet. The better they manipulate, the larger their bonuses. Kind of like the fox guarding the hen house, ya think? If we do nothing meaningful, this house of cards will fall.

    1. Gabriel

      It’s been clear to me since the early ’90s that corporate financial statements [income, balance, and cash flow] receive an awful lot of cosmetics.

      [For example, I had to laugh, and admire his honesty, when Jack Welch after he left GE admitted that he jimmied the income statement to yield smooth increases in earnings year after year. Wall Street loved him, if only for his predictability, and ignored his dive into financial services.]

      The result of the heavy cosmetics is that they are pro forma and useless. Most people know that financial statements are of little use in predicting bankruptcy. And they fail in their broader purpose of conveying the overall health of the firm. Hence they are of limited or no use to informed investors.

  8. DJG

    Great statement up top. It reminded me of Vaclav Havel’s concept of the power of the powerless. Further, as someone who lives in Chicago, I am big on voting. I vote in every election–for many good candidates guaranteed to be defeated. So I have no patience with calls for boycotts or sitting out a cycle. I understand Teachout and Wu and praise their efforts. Yet I am greatly concerned because of still another impending war (a “three-year” war this time around). And I’m concerned about the lack of understanding in the USA among the populace at how poorly the two parties manage the economy and their pals who run the economy (Taibbi’s famous essay on wanting to be peasants).

      1. gonzomarx

        was posted on Smirking Chimp back in 2009, isn’t there now but found it here

        Taibi – The Peasant Mentality in America Is Alive and Well

        “..But actual rich people can’t ever be the target. It’s a classic peasant mentality: going into fits of groveling and bowing whenever the master’s carriage rides by, then fuming against the Turks in Crimea or the Jews in the Pale or whoever after spending fifteen hard hours in the fields. You know you’re a peasant when you worship the very people who are right now, this minute, conning you and taking your shit. Whatever the master does, you’re on board. When you get frisky, he sticks a big cross in the middle of your village, and you spend the rest of your life praying to it with big googly eyes. Or he puts out newspapers full of innuendo about this or that faraway group and you immediately salute and rush off to join the hate squad. A good peasant is loyal, simpleminded, and full of misdirected anger..”

        1. Banger

          That’s been my point for a long time–that is the mentality for the majority of Americans including large numbers of well-educated professionals–it isn’t just ignorance. People like being told what to do and how to think, only a minority want to think for themselves and be around others like them.

          1. sufferin' succotash

            So what’s the conclusion here? Since most Americans think like peasants, political change is hopeless.
            Sorry, can’t buy it. If most Americans wind up thinking like peasants it’s because they don’t see an alternative that makes sense.
            So who’s in charge of supplying an alternative that makes sense?
            Don’t worry. It’ll only take a generation or so.

            1. Banger

              Why do you need a conclusion? I certainly don’t think that there’s no hope for change–but that change has to come with culture change and changing the system.

            1. Banger

              Did I say they were peasants. And believe me I know the territory (encountering and dealing with the common folk–who I value on a personal level more than most educated elites. Peasants really have little choice and little room to move not only mentally but physically as well. I’m saying that authoritarianism is the ‘natural’ state of people who do not wish to pursue either independent thinking of live with a higher(real as opposed to ideological) moral purpose.

              1. Lambert Strether

                Gonzomarx: “It’s a classic peasant mentality….”

                Banger: “That’s been my point for a long time–that is the mentality for the majority of Americans…”

                If you did not, you can see why I thought you did. “Poltical economy,” eh?

          2. EmilianoZ

            This peasant mentality is not limited to Americans. It’s pretty much universal. There’s a quasi instinctive deference for money and power that’s deeply rooted in the 99%er. It’s almost as if the 1%, over the ages, had selectively bred us for that unique quality. For the peasant to turn against his master, he needs to be very very hungry.

            1. Ulysses

              The surest way to turn customary deference into shocking, implacable rebellion is to behave as our elites are now doing. The working people I see daily are now at the stage of grimly realizing that they’re getting the shaft. They wish they could avoid the implications of that fact, but they’re starting to realize that SOMETHING MUST BE DONE. When I ask a guy in a warehouse how he’s doing, he’ll say with a wry grin, “living the dream.” This is code. What’s the translation? “The American Dream we were all told to work hard for is a crock. You and I know we’re little better than slaves, and I’m frankly embarrassed that, as a class, we are putting up with this crap day after day! Today I’m trying to joke about it, but if some halfway competent leaders were to propose a way to change things I’d be there in a heartbeat with my pitchfork and torches!”

              The problem is that a lot of this barely repressed anger could as easily be turned hard right as hard left. I don’t see a big future for people preaching reasonable compromise, moderation, incremental reform, etc. TPTB are hoping to corral people into the next two-minute hate against some “other,” who will distract them from confronting their true oppressors. Yet people are starting to wise up to that game.

              As Honest Abe so famously taught us:
              “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”

              1. wbgonne

                “The problem is that a lot of this barely repressed anger could as easily be turned hard right as hard left.”

                History suggests that turning hard Right is more likely. And since we have a nominal “progressive” like Obama in the U.S. and a nominal “socialist” like Hollande in France running their countries into the ground, the probability of a sharp Right turn goes up. In 2008, in response to Conservatism’s collapse, the country and the world were ready for a dramatic Left turn. But now that Obama and his neoliberal counterparts have failed, people will blame Progressivism and probably embrace Right Wing nationalism or some version of Libertarianism. That Obama and his ilk are using Right Wing policies just gets lost in the shuffle.

    1. Vatch

      Thank you, DJG — voting is important. I too have been disappointed by occasional recommendations by some commenters that we should boycott elections. Even if one’s preferred candidate has zero chance of winning, it is still important to vote for her or him. It can help similar candidates to get on the ballot in future elections, and it reminds the politicians that there are some people who want something more than just Tweedle-Dum and Tweeldle-Dee to choose from.

    2. Tehanu

      Speaking of Vaclav Havel – I love “Disturbing the Peace” and find him inspiring. But what happened after he became president? Did the best he could? Or did he become a neoliberal sell out? Both?

      I guess my broader question is, are there any examples of a social activist, a dissident fighting for justice, obtaining official power and not becoming co-opted by the neoliberal regime?

      1. Ulysses

        Socialist City Council member, and Occupy Seattle activist Kshama Sawant, may eventually succumb to the seduction of a comfortable place in the establishment. Right now, though, she doesn’t seem in any immediate danger of being co-opted.

        “There’s the Democratic establishment, and then there’s the rest of the people, the working people,” she begins in her brisk rat-a-tat Indian accent. “The people on the ground are well to the left of the business and corporate establishment. The majority of the elected body [on the city council] is part of the corporate establishment. We’ve been told that they [Democrats] are on our side, so why do they feel so threatened?

        “We are exposing the Democratic Party for what they are, corporate-controlled. We do not have to accept the failed logic of a two-party system. The Democratic Party establishment has built an infamous resume for themselves, and it includes a regressive tax system, giving nine billion dollars in corporate tax breaks to Boeing, allowing the sky-rocketing cost of housing and making the cost of education out of the reach of working families.”

  9. Skeptic

    Finance and Social Justice
    Excellent how you have distilled the problems.

    “…most simply withdrew their cooperation to the point it suffocated….I’d be curious to learn what other strategies readers have.”

    My number one strategy is to disconnect from the 1% Infrastructure as much as possible. Stop buying their stuff: Monopolized Games, infotainment, logoed products, fats foods, transportation, bankstering, etc. Find and do something else. Stop putting any $$$ into their corrupting pockets. What product/service of the 1% can you cut off Today or Tomorrow? (Demonstrators PLEASE burn all your NYYankees hats and NIKE t-shirts!!!)

    Do do not help to reinforce their High Maintenance Berlin Wall. Separate your own personal Scotland from their City.
    Starve a Bankster today!

    (In the 80s, I started to accomplish my separation from their system by attending Organic Farming Conferences. Those conferences and the information I gained changed my Life. Look for one in your Hood.)

    1. Gabriel

      I am very amazed that no one, as far as I know, has looked at the firm Georgia Pacific, owned by the Koch Bros.

      Georgia Pacific makes and sells a variety of paper [Great Northern toilet paper and napkins] and wood products [plywood and SOP] among others and is a big supplier to Molly-Wart and the big box hardware stores.

      How about a nation-wide boycott of Molly-Wart and the big box hardware stores that sell Georgia Pacific products? Georgia Pacific also sells to institutional customers such as restaurants and nursing homes.

      Why should you support the Koch Bros?

      1. Whine Country

        Just for fun Google Georgia Pacific and count the number of Super-Fund sites they have created. The Koch Brothers get the profits and we get the losses! How could they not like the status quo?

      2. EmilianoZ

        Every motion activated towel dispenser at my workplace is GP. The worst is in the cafeteria. They have this ridiculous contrivance: a plastic cutlery dispenser from the Dixie brand (also part of the GP constellation). It dispenses spoons, forks, knives individually very much like a Pez dispenser. Before that, the cutlery was just put in cans and nobody complained. Of course the dispenser jams constantly and it’s a pain for the staff to refill as opposed to just throwing some forks into some cans.

        1. Joe

          The real world comes to resemble a Terry Gilliam film more and more every day.
          Disruption! Innovation! Progress! Distopia!

  10. Carla

    Yves, re: “There are different ways of coping with these daunting requirements: that of a need for sustained effort with low likelihood of much in the way of tangible success.” This is so true. Thank you for sharing your attitude of stoicism, and as always, for your creation of, and dedication to, Naked Capitalism.

    I am incredibly fortunate to have as my teacher and “mentor in activism” Greg Coleridge of the Program on Corporations, Law and Democracy. Thanks to Greg, whenever I consider whether to expend time and energy on an issue, I now think “Does it change the rules?” This has helped me to focus on fundamentals.

    For me, two rules-changing activities are: learning more about economic and monetary policy; and fostering democracy by challenging corporate rule and the doctrine of money as “speech.”

    For the first, I would share Naked Capitalism of course, and also

    On the second topic, here’s the most recent “debate,” conducted at Indiana University on Sept. 8:

    (To skip the over-long introduction to this 90 minute video, advance to about 7:50 minutes. The fundamental content is in about the first 45 minutes, followed by Q&A).

  11. rusti

    The Slate article on electric buses is idiotic clickbait, as most of the people commenting on that article correctly point out. Electric and hybrid buses have been in operation for years and the design challenges are all well established. There doesn’t seem to be anything particularly compelling about the company that he’s shilling for and there’s no justification for framing it as though they’re in competition with the passenger car segment.

    If you want to see someone doing something actually interesting in the heavy vehicle segment look at Wrightspeed’s drive trains or Volvo’s Electric Roads project.

  12. Kurt Sperry

    “There are different ways of coping with these daunting requirements: that of a need for sustained effort with low likelihood of much in the way of tangible success. I’ve adopted a Stoic attitude, that this is a duty, and one needs to find a sense of reward in the process rather than in the outcomes (and the rewards include forming a community of the like-minded). I’d be curious to learn what other strategies readers have.”

    I’m actually patiently optimistic. One must first accept that cultural change generally happens over intergenerational timescales, and one generational culture will obviously do everything it can to thwart the following one where differences exist, and lastly that the senior generation will hold most of the resources so will generally succeed in doing so. Until of course they fail to. These ‘generational cultures’ aren’t strictly tied to age–there will be young people who identify with the preceding or existing cultural status quo and older people who identify with the next–but they will correlate.

    Politics is profoundly cultural so political change is largely subject to the same forces that periodically rewrite the status quo. Even authoritarian governments are subject to these pressures, so in the end I see all the rigged democracy, panopticon-like surveillance and militarized policing as ultimately incapable of doing more than delaying the inevitable. Whatever that turns out to be. But I’m optimistic based on everything i see. It could take a while though. Or not!

      1. Ulysses

        While most of us who hail from the vast interior could probably benefit from an update, we typically call the region “upstate!” (Sorry, couldn’t resist)

  13. chris

    I just read yesterday’s “Finance and Social Justice” (it was an unusually busy day for this semi-retired-lving-now-on-a-fixed-income 60’s radical type) and wanted to chime in that, like many of your readers, I depend on NC far more than my comments (or, alas, financial contributions) would indicate. As a musician I have mastered many vocabularies (and languages) that help me comment on my field of expertise, but finance is not one of them. For the most part (and because of the usually exceptional clarity of the essays) I understand them but feel totally inadequate commenting on them. Indeed, it seems to me that throughout my web wanderings I, more often than not, encounter limited comments where the essayist says it all and believe you should take a lack of comments (“better to remain silent and be thought a fool…”) as a badge of honor for the remarkable job you do here. Bravo!

    1. Lambert Strether

      Maybe we should put “questions for readers” at the end, or something…. We really do need to be able to talk about this stuff, and the way to talk about it… Is to talk about it.

      1. ambrit

        That depends on the skill sets present at any particular time. I know with a certainty factor of x=99.99% that my comments on most technical economics issues would be, at best, risible. Now an admonition at the beginning that “There will be a test on this” might drive a more focused perusal of the material to occur. (Is there an element of professional give and take intended here? I feel that the boffins would know that and make allowances. Otherwise, is there a factor of “oh s—, you’ve just posted in an “online” forum about your field of specialty and now will have “X” seriousness points deducted from your CV?” You’ve spent time in the balmy airs of academe. Are those back stabbing b——s really that petty? Perhaps NC could set up some sort of “Witness Protection Program” for the true academics so that their contemporaries won’t twig to their real identities.
        Another idea, adapted from the gun nut blogs would be to list the regulars with competency ratings next to each comment. Such as: ambrit, level 2 economics, level 10 blowhard.
        Just thinking out loud.

          1. ambrit

            Sorry for the delay. I just checked back on this thread. (I just learned a hard lesson; clicking on an embedded link automatically erases the reply you have been composing.)
            Most gun nut blogs list the length of time a person has been commenting, and the number of comments they have logged. Some sites also list the number of technical answers they have posted. Something similar to the Stack overflow Bronze, Silver and Gold badges.
            For an economics and political economy blog such as this, the free wheeling nature of the discussions poses a problem in defining what is useful vs. what is just opinion. Thus, rankings can degenerate into a popularity contest quickly. I hesitate to suggest that the hosts rank commentators by their inside knowledge of real identities and CVs because the hosts have too much to do already. (How does one crowd source quality determinations when the skill and knowledge sets needed to do such are not common?) It almost begs for a “Council of Elders” to oversee the rankings.)
            Something simple and basic is best. No quality judgments, that can deteriorate quickly and cause more trouble than it’s worth. (The exception might be a ranking of how many times a commenter has been ‘bought to heel’ for egregious lapses in logic.)
            Good luck!

              1. ambrit

                Sorry, but that’s too true. Since this site, what I’ve observed of it so far, seems dedicated to the classic, “free flow of ideas, (and more than a few conjectures,)” it probably should not be subjected to rigid rules. (Sad to say, this dumps a lot more of the work of organization in the laps of hosts and moderators.) I wish I had the million or so it would take to endow that NC Moderator in Chief Chair.

      2. chris

        That’s a good idea… and of course you are right that the only way to talk about it is to talk about it. I just don’t want to come of as an idjit fumbling for words I don’t quite know how to use. Ya know, I can stand alone in front of thousands of people I don’t know and confidently sing words in languages I haven’t mastered completely, but econo-speak terrifies me for some reason. I’ll try to do better and do not doubt that more comments – even fumbling ones – can help NC increase the attention given it by TPTB.
        And I promise to make a donation to both NC and Corrente as soon as I am able… ran into some unexpectedly expensive health issues this year (and yes, I do have insurance but it’s unsettling how much of the bill it doesn’t cover… but you know that better than most, huh?!).

  14. different clue

    About Zephyr Teachout vs. Cuomo: I am not a New Yorker so New Yorkers would have every right to reject my free advice if I gave any. You will do what you will.

    I can say . . . if I were a New Yorker and knowing just the little I have learned/seen about Cuomo, I would have voted for Teachout under this circumstance. And if Teachout were to run as a Rebel Democrat with the express intention of Nadering Cuomo as step one toward exterminating the “Cuomo wing” of the Democratic Party from existence step by step, I would vote for Teachout in the general election under that circumstance too . . . IFF ! !
    I could be satisfied that Teachout and the Teachoutists really did intend to exterminate the “Cuomo wing” of the NYD Party from existence step by step by step. I would not vote for a mere gesture of spite. I would vote in support of first step in a sincere plan of political “extermination” of the target.

  15. Brooklin Bridge

    In other news, Martha let the “sans-dents” pay for it Coakley wins the DemoRatiClusterMuck abnomination here in Masshypnochusetts.

  16. Kim Kaufman

    “I’d be curious to learn what other strategies readers have.”

    I’ve been working on the local level against, loosely, public school privatization of which LA is sort of ground zero. I work with a small group of like-minded folks with probably not everything in common otherwise – but we all like and respect each other and have various complementary skills. There’s a small group – and then a larger outside group. There are bloggers, ex or present teachers, two PhD scientists, activists; we’ve developed relationships with the few friendly msm, board of ed members/staff and bond oversight committee members also. We got lucky with the “1 Billion for iPads” headline over a year ago – I knew this would get traction with the public and we’ve worked it. The drip, drip, drip of corruption goes on with the latest expose being release of emails showing there were pre-RFP conversations with Pearson and Apple by the superintendent in order to get this deal done. We’ve had some successes – they tried to fire the best person – a critic of the iPad scam – from the Bond Oversight Committee and we helped get him reinstated.

    Someone we know has started posting long comments as “Martin Eden” on one of the establishment-friendly blogs with a running commentary a la Raymond Chandler with an alternate take on the day’s stories. They’re creative, insidery incisive and hilarious – and the blog has also started to take them down! (they’re being reposted elsewhere) It’s good being noisy!

    There are other related issues coming out almost daily. We’ve had many “pass the popcorn” incidents of late. This isn’t just about public education – I see it as a larger social and economic justice issue. The 1% see education as one of the last large pots of $$ left to steal (and plus there’s real estate!). And if we don’t educate our people, they will never be able to fight back – and they’re going to need to. This will not end soon. And, in fact, it will never end – the fight between the haves and have-nots. People must have constant vigilance and engagement with the society they’re part of.

  17. proximity1

    More useful stuff to read: from The Atlantic magazine:

    “________ and the Menace of Unreality” How ______ is revolutionizing information warfare
    by Peter Pomerantsev
    Sep 9 2014, 3:42 PM ET

    Fill in the blanks to discover what you may have missed.

  18. proximity1

    RE: “Putin’s Secret Friends in Paris”

    First, a small house-keeping note: Your link to XXCommitte’s article (a very interesting looking site, by the way!) misattributes as its source Le Monde for a citation of Marine Le Pen which actually appeared (see the excerpt below) in <Les Echos, the financial daily.

    “Sur la politique étrangère, Marine Le Pen affirme avoir une « certaine admiration » pour Vladimir Poutine « qui porte un modèle économique patriote, radicalement différent de celui imposé au monde par les Etats-Unis ». Elle estime que c’est « l’Union européenne qui est à l’origine de la crise ukrainienne » car « en négociant un accord de partenariat exclusif avec l’ancien président ukrainien (…), l’UE effectue un chantage à l’Ukraine en disant : « C’est ou nous ou la Russie. »
    En savoir plus sur

    I’ve observed Marine Le Pen’s self-presentation in French politics ever since she took on the role of party leader from her father, Jean-Marie. While I of course don’t agree with her on the vast majority of issues, she is both very smart and does have a distinct knack for articulating the feelings and numerous of the real neglected needs and interests of the French politically dispossessed. In short, she is squarely positioned as the implacable enemy of the French establishment élite–what the French call the “ENArques” class–those schooled in an élite graduate business program and who go on to take up many of the nation’s most important economic and political posts.

    It’s much more her real motives behind her public pronouncements which have to be carefully judged, than the actual things she claims to support and defend. Moreover, it is very easy for someone unacquainted with her to misconstrue the real import of the words cited in the excerpt above. What she admires about Putin are things which many arch-conservatives admire–nationalistic fervor, disdain for principled fair-play–because that is seen as weakness, and in general an affection for realpolitik as the operational mode of political strategy. Beyond these, Ms. Le Pen has simply no particular affection at all for Putin as an individual–but that is not how a typical outsider, reading her words, would likely interpret them. To U.S./U.K. anglophone eyes, her words seem to suggest that she feels more than a superficial affinity for certain characteristics of Putin’s personality. I’m confident that she does not. She’d always regard Putin–and not disfavorably from a realpolitik’s point of view–as first and always her actual and potential adversary, a man always and really only out for his own interests as he himself defines them. In that, she resembles Putin. But that does not and should not lead the anglophone observer to conclude that she really admires Putin in anything other than two opposing generals can admire their adversary on the battlefield. Le Pen’s words have to be interpreted carefully rather than taken at face value.

  19. proximity1

    Just a clarification of the above house-keeping note–

    XXCommittee’s article carries a link to an article which itself has a link to an article (in “The Local : France’s News in English”) and it’s in this article at “The Local” rather than in the XXCommittee’s article itself, which the erroneous attribution to Le Monde appears.

  20. proximity1

    …that this is a duty, and one needs to find a sense of reward in the process rather than in the outcomes.” …

    That’s my view of it as well. Indeed, if it were not for that, there would be simply absolutely nothing at all in it for me.

Comments are closed.